1. Suppose the required rate is 8% (APR), which of the following assumptions would result in the lowest present value?
a. monthly compounding
b. annual compounding
c. daily compounding
d. quarterly compounding
2. Pratt and Dansville are all-equity firms. Pratt has 4,000 shares outstanding at a market price of $60 a share. Dansville has 3,500 shares outstanding at a price of $36 a share. Pratt is acquiring Dansville for $132,000 in cash. The synergy of the acquisition is $10,000. What is the value of Dansville to Pratt?
$143,000
$136,000
$151,000
$147,000
$125,000